Renato BALDUCCI () (Universita' Politecnica delle Marche, Dipartimento di Economia) Stefano STAFFOLANI () (Universita' Politecnica delle Marche, Dipartimento di Economia)
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In this paper we assume that firms and unions bargain efficiently on wages and employment, whereas work effort is optimally chosen by workers. In the short run, the bargaining process leads to the contract curve. Instead of solving the model and leaving the equilibrium dependent on an exogenous social partners bargaining power, we prefer to leave the wage rate undetermined. Using an endogenous growth model based on human capital, and on the hypothesis that firms invest profits in physical capital while workers optimally allocate their earnings between consumption and investment in human capital, we determine the wage rate that maximizes individual expected utility. Finally, we investigate the relationship between short run behaviour and long run optimality.
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Paper provided by Universita' Politecnica delle Marche (I), Dipartimento di Economia in its series Working Papers with number
188.
Find related papers by JEL classification: D33 - Microeconomics - - Distribution - - - Factor Income Distribution J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General